Korea’s Genome & Company aims US CMO market

South Korea’s microbiome medicine developer Genome & Company geared up for entering the U.S. market to boost profits and make inroads into the globe.

Genome & Company announced on Sept. 8 that it has bought a 69% stake in List Labs, a contract manufacturing organization (CMO) based in San Jose, California, for $27 million. List Labs is making microbiome and bacterial toxin.

“We aim to achieve a CMO revenue of 100 billion won ($85.4 million) by 2025 through expansion of List Labs’ production facilities,” said Genome & Company CEO Pae Jisoo. “We will become a global leading company by securing 20% of the global microbiome market.”

List Labs currently produces reagents for phase 1 and phase 2 clinical trials, generating some 10 billion won in sales a year.

Genome & Company plans to upgrade and expand List Labs’ facilities to manufacture drugs for phase 3 clinical trials and finished medicines by 2024.

“We plan to raise money for the expansion through List Labs. Genome & Company will not issue new shares,” Pae said.

TO BECOME WORLD’S NO. 3 CMO IN 3 YEARS

Through the acquisition, Genome & Company will accelerate its penetration into the U.S. market. Most microbiome CMOs are located in Netherland, Australia and France where the dairy industry is well established. Since microbiome treatment uses living bacteria, the distance drugs move is a key factor of its quality.

The global microbiome market is quickly growing. Active development of the microbiome drugs increased CMO demand.

“In the global microbiome market last year, supply fell short of demand by about 12%,” Bae said. “Supply will be short by up to 40% in 2024.”

Six companies including List Labs are currently dominating the global microbiome industry with their market share at around 70%. It is hard to start the business in the sector since microbiome CMO must be able to cultivate various types of strains with technologies to maintain living bacteria at certain ratios or above.

“We aim to become the world’s No. 3 microbiome CMO within three years and make inroads into East Asian markets around 2030,” Bae said.

Genome & Company secured a stable profit source with the acquisition since the South Korean biopharmaceutical company is able to generate sales through CMO business when it develops new drugs that usually takes more than 5 years.

“List Labs is expected to play a role as a cash generating unit for new drug developments,” said a Genome & Company source.

Write to Ji-Won Choi at jwchoi@hankyung.com
Jongwoo Cheon edited this article.